ECJ judgments

Procurement from a legal entity does not preclude the application of the special scheme for works of art

C-433/24 – Galerie Karsten Greve

The application of the special scheme for works of art is not precluded where the dealer acquires the artwork not directly from the artist, but from a legal person established by the artist.

Galerie Karsten Greve (GKG) operates an art gallery. It applies the margin scheme to the sale of artworks. In 2014, the GKG purchased a painting created by the painter Gideon Rubin; however, the seller was not the artist himself but a UK company named Studio Rubin Gideon, incorporated by Rubin and another artist. The French tax authority as well as the Paris Administrative Court of Appeal took the view that for this painting GKG was liable to pay VAT on an intra-Community acquisition (as the UK was then still a Member State), since the condition for the application of the margin scheme—that the artwork be acquired from the creator or his successors in title—was not fulfilled. The case was referred to the Court of Justice of the European Union (CJEU).

The CJEU held that the VAT Directive contains no rule precluding the application of the special scheme in respect of works of art created by the artist where they are sold through a legal person, and that although special schemes must be interpreted strictly, no restrictive interpretation may be given that would undermine the principle of fiscal neutrality or distort competition. The objective of the special scheme for works of art is to facilitate the introduction of artworks onto the Union market without the need to determine whether a work has already participated in economic circulation. Those principles and objectives would be undermined if the VAT treatment were to differ depending on the legal form chosen by the artist for the sale.

Accordingly, the CJEU held that the special scheme remains applicable where the creator or his successors in title sell the work to the dealer through a legal person, provided that “it may be presumed that the supply is attributable to the creator or his or her successors in title.” This condition is satisfied where the artist or his successors have incorporated the legal person specifically for the purpose of marketing works created by the artist, and where the supply of those works of art to the taxable dealer constitutes the first introduction of those works of art onto the EU market.

Full English text of the judgement

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